The process of successfully buying income property follows this sequence:
1. Establish neighborhood, income, and property selection criteria.
2. Review a volume or file of multiple listings. Select properties that meet your criteria.
3. Visit the properties by yourself. Case the neighborhood. Eyeball the grounds and exterior.
4. Make a tentative selection of properties. Visit properties again with a broker and seller. You may also wish to bring along an appraiser and inspector. Establish the extent of delayed maintenance and true market value.
5. Bid¡ªpercent below market on the property, if still interested. Fill out offer form but don't sign it. Have your attorney insert protective clauses. Negotiate closing terms.
6. Submit bid and earnest money. The earnest money must not exceed that amount that a small-claims court can adjudicate., If rejected and if still interested, increment bid
by percent but no greater than appraiser's market estimate. If seller accepts your bid, contact funding sources, beginning with the
7. Receive loan guarantee with an interest rate not to exceed¡ªpercent. . Enforce compliance by seller of all agreements, such as making repairs and showing income and expense records.
8. Sign loan acceptance form, if loan terms are acceptable and contract terms have been met.
Assess for yourself what figures to use in the blanks. These values will depend on market conditions and the amount of risk you're willing to assume.